High-speed rail board votes to sell $8.6B in bonds

SACRAMENTO — The California High-Speed Rail Authority voted Monday to issue nearly $8.6billion in taxpayer-approved bonds to build the nation's first bullet train as the state rushes to begin construction in July.

Officials are now on track to sell $3.7billion of the bonds. That includes $2.6billion for high speed rail and another $1.1billion for improving existing commuter rail systems in Northern and Southern California.

Lawmakers appropriated the $3.7billion last year, but the Legislature would have to act again to appropriate the remainder of the $8.6billion before the entire amount can be issued.

The six-member board authorized selling the bonds on a 5-0 vote, without debate and with one member absent. Timing of the sale will now be set by the governor, attorney general and state treasurer, though the first opportunity to sell the bonds will be this fall, said Tom Dresslar, spokesman for Treasurer Bill Lockyer.

The project still must withstand lawsuits that have court hearings in coming months. They include a hearing April 19 over the project's environmental impacts, while a May 31 hearing will consider whether the funds meet the requirements set by voters when they approved the high-speed rail program in 2008.

Adverse rulings in those lawsuits could stall the bond money, though authority Chairman Dan Richard said groundbreaking can proceed using $3.3billion in federal matching funds.

The first full segment of the $68billion rail line will run from Madera to Bakersfield. The project eventually is supposed to link Northern and Southern California with trains traveling up to 220mph.

Contractors have submitted bids to design and build the first $1.8billion, 30-mile stretch of track. The bids from five international design teams will be opened later this spring, Richard said. The authority also is in the process of negotiating to buy land for the project's right of way.

"Everything about this project is ambitious," Richard said, but he predicted the authority will meet its construction timetable.

Interest payments on the entire amount would cost the state an estimated $700million a year for 35 years, but at least the $175million in annual debt payments on the initial bonds would come from fees paid by commercial truckers, not from the state's general fund, Richard said. He said it is not clear if the overweight fees from truckers would cover the entire amount.

Several speakers challenged the timing of the authorization during the board's public comment period, asking why the board was acting on the bulk of the bonds approved by voters now when it could be years before the money is needed. Kevin Dayton, a public policy consultant from Roseville, questioned whether the board was rushing to beat the outcome of the lawsuits attempting to block the railroad.

But Richard said the board was merely being efficient by authorizing all the bonds now, so it would not have to revisit the issue in coming years.

The authority would have to comply with a court order no matter what steps it has taken, he said, and state officials are unlikely to issue the bonds until they are satisfied that they will not be blocked by the courts.

"We have to resolve those issues before the court and we are very confident about that," Richard said. "I think until those matters are resolved, I'm not sure the treasurer would go forward with this."